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Liniya Prava Advises on Placement of First Russian Concession Bonds for Public Transport

Liniya Prava Advises on Placement of First Russian Concession Bonds for Public Transport


Liniya Prava is reporting that it supported the placement of non-convertible interest-bearing certificated bonds classes A1 and B of LLC Transportation Concession Company (TCC) — a consortium established by the LSR Group and Management Company Leader — which took place on Moscow's Interbank Currency Exchange on September 27th, 2016.

According to Liniya Prava, "the bond placement is part of an investment project to create, reconstruct, and maintain a tramway network in the Krasnogvardeiskiy district of St. Petersburg. The project financing is structured to include a senior and a junior tranches for 9,900 and 2,013 billion rubles, respectively. These bonds are issued by the private PPP partner and are secured by pledge of monetary obligations under the concession agreement. The two bond issues classes A1 and B by TTC have been attributed an A++ (exceptionally high (the highest) level of reliability) rating by the rating agency Expert RA. This rating is explained by high level of liquidity in the execution of the project, low exchange risks of the concessionary, high quality strategic planning, and long-term nature of the obligations."

Liniya Prava’s support included, among other things, consulting on the decision to issue the securities, drafting the prospectus, and counselling at the stage of registration and placement of securities. According to the firm, placing secured bonds for the purposes of financing PPP projects "is extremely rare and one regarding projects in the area of public transportation is simply unique." The firm reports that the terms of the issues were "specifically drafted to provide maximum protection to senior tranche bondholders, including via pledge of concession agreement rights, the pledged account mechanism, as well as via subordination of the junior tranche."

Liniya Prava previously advised TCC on the May 30, 2016 concession agreement it entered into with the Government of St. Petersburg for the creation and reconstruction of the tramway network (as reported by CEE Legal Matters on June 6, 2016).